SilverCrest secures $120m facility for Las Chispas

“We are very pleased to have concurrently signed the credit agreement and the EPC contract with two well-established and respected partners in the mining industry. The commitment by both partners ahead of the targeted January 2021 release of the Las Chispas feasibility study speaks to the strength of our team and project,” N. Eric Fier, the company’s CEO, said in a media release.

“We have been working closely with Ausenco to complete the EPC contract and the feasibility study in close succession.  We are confident that their intimate knowledge of the project will benefit the successful construction and commissioning of Las Chispas,” added COO Pierre Beaudoin.

The $120-million, four-year project finance facility carries a total cost of capital estimated at 10% and does not require hedging, offtakes or production-linked payments. Thus far, $30 million has been drawn and subsequent drawdowns are available once certain customary conditions are met. The facility has a 20-month availability period and up to $30 million may be used for exploration and regional acquisitions.

The lump sum EPC contract covers the construction of a 1,250 t/d process plant at Las Chispas with Ausenco’s work scheduled to start in February. Plant start-up is planned for the second quarter of 2022, with a production ramp-up starting in the third quarter of 2022. The contract does not include underground mine development, nor does it cover the construction of the camp, powerline or tailings facility.

In addition to completing the Las Chispas feasibility, Ausenco is also completing detailed engineering and the construction management plan for the project. The procurement of long lead time items starting in the fourth quarter of 2020.

At year-end, SilverCrest had a cash balance of $135 million, which, together with the funds from the credit facility, is expected to “provide a substantial component of funding for construction, exploration and regional growth initiatives.”

A 2019 preliminary economic assessment (PEA) for Las Chispas defined an eight-and-a-half year mine, producing an average of 7.6 million oz. silver and 81,600 oz. gold — or 13.7 million oz. silver-equivalent — in its first four years of operations at AISCs of $4.89 per oz. silver-equivalent. With an initial capital cost estimate of $100.5 million, the after-tax net present value estimate for the operation stands at $506.9 million, with a 91% internal rate of return; at a 5% discount rate and based on $16.68 per oz. silver price and $1,269 per oz. gold.

(This article first appeared in the Canadian Mining Journal)

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